Correlation Between Amazon and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Amazon and Centrais Eltricas at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amazon and Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Amazon and Centrais Eltricas and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amazon with a short position of Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Centrais Eltricas.
Diversification Opportunities for Amazon and Centrais Eltricas
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Centrais is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas and Amazon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amazon Inc are associated (or correlated) with Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Amazon i.e., Amazon and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Amazon and Centrais Eltricas
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.64 times more return on investment than Centrais Eltricas. However, Amazon is 1.64 times more volatile than Centrais Eltricas Brasileiras. It trades about 0.21 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.18 per unit of risk. If you would invest 5,373 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 475.00 from holding Amazon Inc or generate 8.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Amazon Inc |
| Centrais Eltricas |
Amazon and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Centrais Eltricas
The main advantage of trading using opposite Amazon and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Centrais Eltricas can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Amazon vs. G2D Investments | Amazon vs. Bread Financial Holdings | Amazon vs. United Rentals | Amazon vs. The Bank of |
| Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. BB Seguridade Participacoes | Centrais Eltricas vs. Transmissora Aliana de | Centrais Eltricas vs. Itasa Investimentos |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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